Morgan Stanley this morning upgraded HSBC (HSBA.L) to EQUALWEIGHT from UNDERWEIGHT citing share price underperformance. The broker says that HSBC (HSBA.L) has underperformed the STOXX600 banking index by around 17% this year so far and says compared to its european peers the group looks an appealing investment at current values and a strong dividend yield of 6% should attractive to investors and appears to be sustainable in the long term and also highlighted potential US rate hikes as a benefit to HSBC (HSBA.L).
“With Brazil, Mexico, US and Turkey being worked on over the next 12-24 months, we expect either a recovery in returns or more radical solutions, for example, disposals/exits for these units.
With around $400bn of surplus deposits, an extra 1% yield on this float could add around $4bn to net interest income,or around 6% of 2014 revenues or around 18% of 2014 pretax profit, though the impact on asset quality could offset to a degree.”
Morgan Stanley maintained a current target price of 600p on the shares.
Morgan Stanley this morning upgraded HSBC (HSBA.L) to EQUALWEIGHT from UNDERWEIGHT citing share price underperformance.
The broker says that HSBC (HSBA.L) has underperformed the STOXX600 banking index by around 17% this year so far and says compared to its european peers the group looks an appealing investment at current values and a strong dividend yield of 6% should attractive to investors and appears to be sustainable in the long term and also highlighted potential US rate hikes as a benefit to HSBC (HSBA.L).
“With Brazil, Mexico, US and Turkey being worked on over the next 12-24 months, we expect either a recovery in returns or more radical solutions, for example, disposals/exits for these units.
With around $400bn of surplus deposits, an extra 1% yield on this float could add around $4bn to net interest income,or around 6% of 2014 revenues or around 18% of 2014 pretax profit, though the impact on asset quality could offset to a degree.”
Morgan Stanley maintained a current target price of 600p on the shares.